Grace ked Company has a defined contribution pension scheme. However, during the year, it introduced a new post- employment plan name the Fund for its employees as a way of enhancing the benefits they will receive when they retire. Grace ked company makes monthly contributions into the Fund that are equal to a set percentage of the salary cost. Upon retirement, employees will receive annual payments from the Fund based on their number of years of service and their final salary. The Fund is voluntary and Grace Ked Company can cancel it at any point. Grace Ked Company has a history of paying employees benefits that are substantially above the national average, with annual increases in excess of inflation. Grace Ked Company has won many accolades as a “top employer” and received positive coverage from the national press when the Fund was announced. The leadership team are well trusted by the employees. Required: Advised Grace Ked Company on whether the FUND is a defined benefit plan or a defined contribution plan.
Grace ked Company has a defined contribution pension scheme. However, during the year, it
introduced a new post- employment plan name the Fund for its employees as a way of enhancing the benefits they will receive when they retire. Grace ked company makes monthly contributions into the Fund that are equal to a set percentage of the salary cost.
Upon retirement, employees will receive annual payments from the Fund based on their number of years of service and their final salary. The Fund is voluntary and Grace Ked Company can cancel it at any point.
Grace Ked Company has a history of paying employees benefits that are substantially above the national average, with annual increases in excess of inflation. Grace Ked Company has won many accolades as a “top employer” and received positive coverage from the national press when the Fund was announced. The leadership team are well trusted by the employees.
Required:
Advised Grace Ked Company on whether the FUND is a defined benefit plan or a defined contribution plan.
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